Press Release: Statement at the Conclusion of the IMF Staff Mission to Jamaica
November 13, 2013Press Release No. 13/446
November 13, 2013
An International Monetary Fund (IMF) mission visited Jamaica during November 6-13, 2013 to conduct discussions on the second review of Jamaica’s IMF-supported program under the Extended Fund Facility (EFF). The mission met with the Minister of Finance, Hon. Peter Phillips, Bank of Jamaica Governor Brian Wynter, Financial Secretary Devon Rowe, senior government officials, as well as representatives of the private sector and civil society.
At the conclusion of the mission, Mr. Jan Kees Martijn, the Fund’s mission chief for Jamaica, issued the following statement in Kingston:
“The Fund mission reached preliminary understandings with the authorities on a set of economic policies detailed in an updated Letter of Intent.
“Discussions with the authorities focused on economic performance under the program and policies for 2013/14 and the remainder of the program period. Economic activity is tentatively estimated to have expanded in the July to September quarter by about 0.9 percent year-on-year, while consumer price inflation increased to 10.5 percent in September. Net international reserves have fluctuated around US$900 million in recent months, with gross reserves at US$1.7 billion by end-October 2013, equivalent to three months of import cover. The execution of the 2013/14 budget has been broadly on track.
“Overall policy implementation under the program is strong. All quantitative performance targets and indicative targets for end-September were met, including the floor on social spending. All structural benchmarks to date have also been met in a timely manner, with the exception of the tabling of fiscal incentives legislation, which was subject to a minor delay.
“Looking ahead, the critical challenge will be to support economic growth, while continuing to undertake the necessary fiscal adjustment. In this regard, key elements of the authorities’ updated program include:
- The tax reform's next steps, designed to make the tax system more supportive of economic growth and employment creation. This could be achieved by simplifying the system, broadening the tax base, eliminating ministerial discretion in the granting of incentives, and reducing tax rates, while keeping the overall tax reform revenue neutral.
- The establishment of a binding fiscal rule to enhance fiscal transparency and lock in the gains from fiscal consolidation, and to take effect starting with the next (2014/15) fiscal year. The aim is to limit the annual budget deficits of the wider public sector (covering all fiscal activities) so as to achieve a reduction in public debt to no more than 60 percent of GDP by 2025/26.
- Actions to promote growth by improving competitiveness and the business climate and pursuing strategic investments. These policies are bolstered by important support by the World Bank and the InterAmerican Development Bank. They include plans for better targeting and management of public investments, projects to reduce the cost of electricity, and reforms to enhance access to credit and make the labor market more flexible.
- Further developing the financial system, including by strengthening the legal and regulatory framework applicable to the securities dealers sector.
- Strengthening the social protection framework, with enhanced efforts to move recipients from welfare to work.
“These preliminary understandings are subject to approval by the IMF’s Management and Executive Board. Provided that performance remains strong, Board consideration of the second review of Jamaica’s IMF-supported program under the EFF could take place in late December. Upon approval, SDR 19.97 million (about US$30 million) would be made available to Jamaica.
“The mission would like to thank the authorities and technical staff for their excellent cooperation.”
IMF COMMUNICATIONS DEPARTMENT